Hewlett-Packard, Tigers at Heart
Going to work for Hewlett-Packard was not a matter of chance. I persisted
for four months until Noel Eldred, the marketing director, got Packards
permission to hire me. I was the 300th employee.
Packard and Hewlett didnt happen to be successful by accident.
Both were very smart and industrious. Early on Packard had two essential
experiences that set him up for his business career. First, as fullback
on the Stanford varsity football team, he learned how to compete and
he learned the importance of winning. Second, he worked after graduation
for General Electric, the best managed American company at the time,
and specialized in the technical management of engineers.
These two experiences provided the essentials of Hewlett-Packard Company.
Then Hewlett came in as the quarterback, the creative thinker. Hewlett,
the thinker, and Packard, the fullback, made the perfect team.
A lot of attention has been given to Hewletts first product,
the RC oscillator with the cathode coupled feedback. For sure it was
an important innovation in its time, but if it hadnt sold, Hewlett
and Packard would have promoted one of their many other product ideas.
To get an idea of their diversity of product ideas, one of Packards
original ideas was a mechanical lettuce thinner. Using an electronic
eye, this agricultural machine would selectively thin a new lettuce
crop so it would produce the optimum size head.
Along with other projects, Packard spent years on the product, which
was commonly, referred to as the Electronic Mexican, and
actually got it working to some extent. But, ironically, he never
could perfect the windshield wiper that removed the crop dust from
the electric sensor. After 15 years he gave up.
Early on, Packard had his greatest successes by picking, one at a
time, various instruments from General Radios product line and
improving them to the extent that he won market share. He did the
same thing taking a high frequency voltmeter from Fred Hormans
product line; Hormans main product was thus wiped out. Horman
saw the writing on the wall and became Packards sales representative.
Fred Horman provided the valuable entry into the U.S. Military market,
which was to become the linchpin of Hewlett-Packards success
during World War II up through the Vietnam War and even afterwards.
Charlie Means, a long-time banker and later a friend of mine made
them their first start-up loan of $400. He told me later that he understood
very little about their products but was betting on them personally.
Charlie Means further confided to me that $400 seemed like a large
amount at the time (in the middle of the Depression) so to make it
look better on the books he made separate loans of $200 to Hewlett
and $200 to Packard. These loans not only launched Hewlett-Packard
but also led to Means very successful banking careerthe
continuing loyalty between him and Hewlett-Packard was a financial
At HP I worked first in production, next in marketing and finally
in the lab. In marketing I got to know Dave Packard pretty well, and
in the lab I spent some time with Bill Hewlett, both outstanding men.
I fully expected their company to move up in the ranks of the Fortune
500, as they have since done. These two men are well known for their
liberal personnel policies, for their public spirit, and their philanthropies,
so I neednt elaborate on that.
While in marketing at HP I made a study (after hours on my own time)
of the profitability and competitive position of their major products.
I put together a list of about ten major instruments whose prices
could easily be raised about 10% without affecting their competitive
position, and I made a second list of a half dozen instruments where
the profit was excessive, 30 or 40%. I felt these products should
be reduced in price before they attracted competition. I passed on
this information through my boss, Noel Eldred, to Dave Packard. After
a couple of months of thinking about it he finally came back saying
he approved all the recommended price increases, but for now, not
to lower the prices as recommended on the second list. That old fox
was right; we never did attract any competition on those overpriced
One thing, by the way, that I have been very good at is finding geniuses
in the ash bin and turning them into great contributors. Often I have
been able to do this and, in the process, it really helped my own
career. One thing is true, you cant do it all yourself. What
success I have had comes from the thousands of employees who have
worked for me over the years. And some of the very best ones were
those I rescued.
I had been studying new product possibilities for Hewlett Packard
on my own and informally along with Ph.D. Pete Lacy, lab engineer
in the Development Lab. Pete Lacy was an eccentric genius; he also
was a serious drinker, to the extent that he was pretty much shunted
aside at Hewlett Packard. They just couldnt depend on him. I
developed an informal rapport with Petehe was smart; and I was
a beginner. During long coffee breaks I talked to Pete about advanced
technologies that could relate to new products, and I pulled a lot
of fundamental information from him. Talking informally, we identified
a new sampling type instrument that multiplied frequency coverage
a thousand fold. That was significant! In a rather comprehensive memo
I outlined the product idea to Norm Schrock, my lab boss, and to Hewlett
and Packard as well. Nobody reacted. Everybody was probably expecting
Schrock to take the ball, but he was a conservative guy. An indication
of how conservative he was is one day when he and a group from HP
were driving down a country road behind Stanford. Hewlett looked out
and said, Look at those sheep, they are newly shorn. Schrock
glanced up and replied, Uh-huh, at least on this side.
Schrock was a real prove-it-to-me type engineer; so nothing happened
on my great sampling idea.
Finally Pete Lacy and I read a technical paper from an English engineer,
a fellow at Harwell (the English atomic energy establishment) who
had built a primitive sampling instrument that worked. As luck would
have it, Hewlett was travelling in Europe at that time. I called him
and told him to stop by Harwell to see the instrument. He did, and
seeing is believing; he bought the product idea and from then on I
had top priority for my new product.
I got a team assigned and once we got a first prototype instrument
put together, I showed it to Hewlett and let him know that for certain
applications it would give us 1,000 times higher frequency coverage
than Tektronix. He was beside himself. Tektronix was our big competitor
at that time and Hewlett never shrank from competition. Hewletts
eyes lit up as he chuckled. Tektronix will be like a she bitch
in heat. If she runs she will get chased and if she stands still she
will get screwed.
Happy as he was about this new technology, even Hewlett didnt
realize the full potential of this sampling technology in leading
to other instruments. It turned out that the sampling technology which
Pete Lacy and I were introducing to Hewlett-Packards product
line would lead to the most profitable line of high frequency counters
and Vector Network Analyzer (VNA) instruments the company had ever
Hewlett-Packards feeling about competitors further came to the
fore when I left the company to start up my own firm. I did everything
properly, including a generous notice. But after I was out the door
with all good wishes from everyone, Packard casually passed the word.
Either hes for us or hes again us, and its obvious
hes not for us. I expected a little more neutrality on Packards
part since I had made a small fortune for him in the marketing area
and had laid the groundwork for the most successful product line he
ever had. Over the years, as both our companies progressed, Packard
never forgot that I was no longer for him and he played the role of
a most aggressive competitor, no holds barred.